China orders media to have more positive tone on interest rates stories

​Chinese officials have ordered local media not to “hype” a story about interbank problems and avoid the term “cash crunch”. The directive came as an effort to calm down financial markets that have seen interest rates rise sharply.

Seeking to avoid an apparent repeat of the June cash crunch that
caused panic among investors and weakened China’s debt-ridden
financial markets, Chinese censors ordered financial reporters to
tone down the issue of a liquidity crisis, the Financial Times
reports.

Last week interbank rates jumped to 9.9 percent and neared a
June’s sky-high of 13.4 percent, as the People’s Bank of China
(PBoC) that wants to make lenders more disciplined, seemed
unwilling to inject money into the markets.

However, PBoC said on Thursday it had carried out “short-term
liquidity operations” to tackle the problem and on Friday
released a more detailed report, saying it would inject $49
billion into the financial market.

In a similar move in June, Chinese authorities ordered the media
to “strengthen their positive reporting” and “fully
report the positive aspect of our current economic situation,
bolstering the market’s confidence”, according to a copy
obtained by the FT.

Over nine consecutive days the benchmark Shanghai Composite Index
has fallen, with 2 per cent on Friday, making it the longest
losing streak in over 19 years.